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When the exterior EIFS system of a building wall fell down following a severe storm more than 10 years after construction had been completed, a ten year statute of repose was held to bar the building owner’s suit against the construction contractor regardless of whether the legal cause of action was framed as tort (negligence) or breach of contract.

In Hagerstown v. Hagerstown, 793 A.2d 579 (Md. 2002), the court reviewed the purpose and the details of the Maryland statute of repose affecting construction contracts, and concluded that the statute in question was not limited in its application to tort actions, but applied as well to claims for breach of contract or breach of warranty. As noted by the court, many states have adopted statutes of repose with respect to actions on defective improvements to real property. These statutes vary widely “in terms of what they cover, who is protected, and the time periods allowed.” Some statutes such as the District of Columbia, New Mexico and Connecticut expressly exclude breach of contract actions from the statute of repose. Other states have statutory language quite similar to that of Maryland and interpret the language such that it will only apply to tort actions and not to breach of contract. Examples of these, says the court, include Ohio and Minnesota. While Texas courts conclude that their state’s statute applies to both breaches of contract and tort actions.

According to the Maryland Court of Appeals, the state statute is “intended to protect architects, engineers, contractors, and others involved in the construction industry from being hauled into court by reason of latent defects that did not become manifest until years after the completion of construction.” The court says, “That protection would be fragile, indeed, if it depended on how a plaintiff chooses to frame and plead its cause of action.” In the final analysis, says the court: “The issue should be whether, if the injury or damages arises from the defective and unsafe condition of an improvement to real property, that injury or damage occurs more than ten [ ] years after ‘the date the entire improvement first became available for its intended use,’ and not whether the claim is pleaded as one in contract or tort.” Since it concluded that the clear intent of the statute was to terminate liability ten years after the damage caused by the latent defect, the court held that both the tort and breach of contract claims were barred by the ten-year statute of repose.

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 4, No. 9 (Oct 2002).

Copyright 2002, ConstructionRIsk.com, LLC